 "IRDAI")
The Insurance Regulatory and Development Authority of India (Irdai) has announced that retail policyholders can cancel their insurance policy at any time during its term by notifying the insurer, and they will receive a refund for the remaining period of the policy.
In a circular, the Irdai said, “In case the policyholder cancels the policy, he/ she is not required to give reasons for cancellation. The insurer can cancel the policy only on the grounds of established fraud, by giving a minimum notice of seven days to the retail policyholder.”
It further said that every insurer should offer a retail product identified and designated as a base product, outlining the essential minimum coverage for each line of business.
If the customer cancels the policy and its term is up to one year, the insurer should refund the proportionate premium for the unexpired policy period, provided no claim has been made during this period, it stated. Additionally, a refund for the unexpired period should be made for policies with terms exceeding one year if the risk coverage for those years has not commenced, as stated in the master circular issued by the Irdai.
Documents related to settlement
The regulator said no claim should be denied due to missing documents. All necessary documents should be requested during the underwriting process. “The customer may be asked to submit only those documents that are directly related to the claim settlement such as claim form, driving licence, permit, fitness, FIR, untraced report, fire brigade report, post mortem report, books of accounts, stock register, wage register and repair bills (only in cases where cashless is not available), wherever applicable.”
On cancelling the statutory Motor Third Party Liability insurance, Irdai said, “Under no circumstances can the insurer cancel statutory Motor Third Party Liability insurance or any other compulsory insurance mandated by law except in case of double insurance or total loss.”
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The regulator stated that every retail customer should receive a Customer Information Sheet (CIS) with each policy. This sheet should explain the basic features of the policy in one place. It should include a summary of the scope of coverage, add-ons, basis of sum insured, sum insured, exclusions, deductibles, special conditions and warranties, endorsements, and information regarding the claim procedure, including claims intimation and processing, it said.
Options under motor insurance
On motor insurance customers, the regulator said that such customers should be given multiple options such as Pay as you Drive, Pay as you Go, Pay as you Use insurance cover, and comprehensive cover that includes depreciation coverage.
It further said that the insured's declared value (IDV) of the vehicle will be considered as the "sum insured" and it will be fixed when the policy period starts for each insured vehicle.
Irdai said, “Any loss that is reported under a general insurance product that exceeds Rs 50,000 or more (in the case of motor insurance) and Rs 1,00,000 or more (in the case of other than motor insurance) needs to be mandatorily surveyed by a registered surveyor and loss assessor."
